Is Costco Cooling Off? Why December Sales Growth Might Look Slower

Costco Wholesale Corp (NASDAQ:COST) is scheduled to report its December sales on Wednesday, January 7, after the markets close.

The company is likely to report total comps of 2.2%, representing a significant deceleration from last year's 7.4%, according to Telsey Advisory Group.

The Costco Wholesale Analyst: Analyst Joseph Feldman maintained an Outperform rating and price target of $1,100.

The Costco Wholesale Thesis: Core merchandise comps, which excludes an estimated gas and forex net tailwind of around 20 basis points (bps), could come in at 2.0%, versus last year's 9.9%, Feldman said in the note.

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Gas prices declined in December, "which should create an estimated comp headwind of ~20 bps," the analyst stated. "That said, the weaker U.S. dollar should result in an estimated comp tailwind of ~40 bps, based on recent currency trends," he further wrote.

Feldman further estimates:

• U.S. comps, ex gas, of 1.0% versus 9.8% a year ago
• Canada comps, ex gas and FX, of 4.0% versus 10.3% last year
• Other International comps, ex FX, of 5.0% compared to 9.8% a year ago

COST Price Action: Costco Wholesale shares were down 0.46% at $858.34 at the time of publication on Friday, according to Benzinga Pro data.

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